Nigerian banking index gains but industrial goods sector declines

In the Nigerian stock market, banking stocks have continued to attract investors' interest, driving the all share index higher, while the industrial goods sector is facing a steep decline. Dare Fajimolu, the Chief Research Officer at Blue Vertex, joined CNBC Africa for a recap of today's trade. Fajimolu started by explaining that despite the negative sentiment in the entire market, there have been flashes of opportunities. These opportunities have been primarily driven by sustained interest in some banking stocks. Due to the impact of the COVID-19 pandemic and other challenges facing Nigeria, the broader markets have not seen the same level of interest. He highlighted that the banking sector dominates activities in terms of volume and liquidity, accounting for more than 70% of volume and more than 60% of value in the market. Additionally, banks play a crucial role in driving the broader economy, making them strategically positioned for investment. When asked about specific stocks of interest for investors, Fajimolu mentioned Sterling Bank and First Bank as potential options. He emphasized that these banks are essential for various sectors of the economy and are likely to attract interest from investors looking at long-term growth prospects. Moving on to the industrial goods sector, Fajimolu discussed the challenges it is facing, particularly due to the COVID-19 pandemic. He noted that consumer goods stocks have declined significantly, with companies like Nigerian Breweries and Nestle Nigeria experiencing a downturn. The pandemic has impacted consumer behavior and disposable incomes, leading to a decline in demand for these products. Fajimolu also pointed out the impact of Nigeria's recent downgrade to a negative outlook by credit rating agencies. He highlighted the country's reliance on oil revenue and its effect on investor sentiment. The downgrade could lead to higher borrowing costs for the government and deter foreign investments, affecting the overall market outlook. In conclusion, Fajimolu emphasized the importance of monitoring the fluctuating market trends and the need for investors to make informed decisions amid uncertainties in the global economy.